New Tractor Sales Are Declining

[Cahaba Valley Farm]

It looks like 2022 (black) is tracking pretty close to the 5 year average (red)

View attachment 768001

That's a good observation.

 

[rScotty]

I grew up on a farm in the 50s and 60s. I take personal offense in you calling us ignorant. Your ignorance is fully displayed in that comment Sir.

I find that funny, ovrszd. But I'm not sure that everyone will understand your humor.

 

[5030]

One man's ceiling is another man's floor.

 

[Torvy]

One man's ceiling is another man's floor.

Sometimes you're the windshield, sometimes the bug.

 

[arrow]

There are a couple caveats to this generalization: The smallish tractor company I work for ordered about 50 tractors in Feb 2021. They only just started tricking in August of 2022. We sold 38 of these tractors before they landed.
In March of 2022, the owner ordered 30 more tractors. They are coming in now and we have a fully stocked tractor yard just like we did before covid.
Sales at this yard have been excellent and if anything, an actual upturn unprecedented in its sales history.

I think the factors involved here are to do with regional consumer need, pricing and availability of product.
Those are factors that continue to hold true no matter what market fluctuations may occur.
.
We are getting customers from further and further away as a result.

 

[Cahaba Valley Farm]

I stumbled across this article tonight and thought I would share it as it pertains to the recessionary environment that we are headed off into. It was a very interesting read and dealt with the recession of '08 and '09 but it also reveals the difference in business philosophy between Kubota and Deere. I hope you will find value in it.

Kubota: New Products 'Earn' Dealers Business

Farm equipment market today feels a little bit like the '80s.

www.farm-equipment.com

 

[rScotty]

I stumbled across this article tonight and thought I would share it as it pertains to the recessionary environment that we are headed off into. It was a very interesting read and dealt with the recession of '08 and '09 but it also reveals the difference in business philosophy between Kubota and Deere. I hope you will find value in it.

Kubota: New Products 'Earn' Dealers Business

Farm equipment market today feels a little bit like the '80s.

www.farm-equipment.com

Did you post the right article? I didn't see anything in there about Deere. Our yellow Deere dealer is doing well. We avoid the green JD dealership so don't have any idea about them. Kubota is doing well. Lots of tractors and lots of sales. Not a used machine on the lot.

I'm sorry to hear that you are expecting a recession where you live. Where we are it doesn't seem to be headed that way. It's a big country and varied. Here in the Western US financial things seems to be chuggng along just fine. Everyone is unhappy about prices, but it hasn't slowed purchases down. Gas costs too much, but that hasn't slowed driving either. Housing has fallen 10% this fall, but it was up 20% last year so we knew it would. The older folks I talk to are spending savings - but realize that to be part of a normal financial cycle.
The important thing is that people looking for work have their choice of jobs.

rScotty

 

[scootr]

Did you post the right article? I didn't see anything in there about Deere. Our yellow Deere dealer is doing well. We avoid the green JD dealership so don't have any idea about them. Kubota is doing well. Lots of tractors and lots of sales. Not a used machine on the lot.

I'm sorry to hear that you are expecting a recession where you live. Where we are it doesn't seem to be headed that way. It's a big country and varied. Here in the Western US financial things seems to be chuggng along just fine. Everyone is unhappy about prices, but it hasn't slowed purchases down. Gas costs too much, but that hasn't slowed driving either. Housing has fallen 10% this fall, but it was up 20% last year so we knew it would. The older folks I talk to are spending savings - but realize that to be part of a normal financial cycle.
The important thing is that people looking for work have their choice of jobs.

rScotty

If you do not see a downturn in your local economy gird your loins. The world is in a downturned economy and sooner or later we all will see some affects locally regardless of how well we are doing now. IMHO


Kubota said "We're trying to hold our market share and gain a little bit. This seems to be the only target to chase in this market. If the economy continues on its current course, it will be another tough year for small tractors, and probably impossible to sell more than we did last year. We'll just be chasing the wind."

 

[rScotty]

If you do not see a downturn in your local economy gird your loins. The world is in a downturned economy and sooner or later we all will see some affects locally regardless of how well we are doing now. IMHO


Kubota said "We're trying to hold our market share and gain a little bit. This seems to be the only target to chase in this market. If the economy continues on its current course, it will be another tough year for small tractors, and probably impossible to sell more than we did last year. We'll just be chasing the wind."

Keep in mind that article was written almost 15 years ago and during the depths of a major recession. It's more than a little bit dated. Today isn't even close to then.

Those who watch may notice that people who are making money don't talk about it much. That causes articles and discussions to focus disproportionately on the negative side of the economy. Focusing on the negative doesn't mean it is going that way, it just means the downside gets more headlines.

I see the economic future differently now than I used to.
rScotty

 

[scootr]

Keep in mind that article was written almost 15 years ago and during the depths of a major recession. It's more than a little bit dated. Today isn't even close to then.

Those who watch may notice that people who are making money don't talk about it much. That causes articles and discussions to focus disproportionately on the negative side of the economy. Focusing on the negative doesn't mean it is going that way, it just means the downside gets more headlines.

I see the economic future differently now than I used to.
rScotty

The middle class is losing buying power and the cost of borrowed money is rising right now. That means the consumer is losing the ability to consume products and services.
How is a weak less capable and confident consumer not negatively affecting the economy now as it did in 2008?
Explain to me how the economy now is so different than 1980, 1990, 2008.

 

[2manyrocks]

Wayyy more federal debt and much larger money supply than in 2008. There are those who argue that the problems of 2008 have simply been kicked down the road to 2022, but in the meantime, years of QE have set us up for where we are headed today.

 

[scootr]

Wayyy more federal debt and much larger money supply than in 2008. There are those who argue that the problems of 2008 have simply been kicked down the road to 2022, but in the meantime, years of QE have set us up for where we are headed today.

I might not be the only reader that had to google QE.
Quantitative Easing:
Quantitative easing is a type of monetary policy in which a nation's central bank tries to increase the liquidity in its financial system, typically by purchasing long term government bonds from that nation's largest banks and stimulating economic growth by encouraging banks to lend or invest more freely.

 

[rScotty]

The middle class is losing buying power and the cost of borrowed money is rising right now. That means the consumer is losing the ability to consume products and services.
How is a weak less capable and confident consumer not negatively affecting the economy now as it did in 2008?
Explain to me how the economy now is so different than 1980, 1990, 2008.

I think you had to live through those periods to fully understand how they differed financially from today. Since you brought up the subject of borrowing, I'll stick with that. It's a good way to look at the differences.

In all of those times you mention, today's interest rates would have been seen as low. Interest rates were much higher then, and repayment periods were shorter. And nobody - not even the most radical - talked about "debt forgiveness". That was a concept that didn't even exist....probably it couldn't have existed.

Another thing, I'll add an edit here because it is important. During those times a co-signature guaranteeing payment was commonly required for young borrowers and even known good risk loans often required some sort ot collateral as a guarantee. Those requirements are rarely mentioned today.

But more importantly was how borrowing was used in 1980, 1990, and 2008. In spite of being recent, during all of those times you mention, people stlll tended to take on debt as a means to invest in something that would gain value. Taking on debt just to consume - to buy products which were either used up or lost value over time - was much less common. Today that trend has almost completely reversed.

rScotty

 

[scootr]

Yes, I have held a SS card since 1968. I have been a wage earner through the last 50+ years.
A survey said Americans carry more credit card debt now. Debt forgiveness for a few means nothing but more debt to the collective consumer. Debt forgiveness is simply debt shifting.
"Consumer debt in the U.S. has grown by 25 percent in five years and doubled since the turn of the century."
I think you will see a pullback from the consumer.
For the average consumer. And that is who drives the economy, not the federal govt. Every aspect of their daily life will cost more. Their wages are not increasing due to inflation sapping the dollar. I see people taking on debt for daily living. The average worker is carrying $5-6k CC debt in the US.
Just watch and we can talk about the results in 2,3, or 5 yrs.

 

[5030]

I believe what will determine new under 40 horse tractor sales will be fuel costs more than anything else. The under 40 segment is almost 100% a discretionary purchase.

 

[Cahaba Valley Farm]

Did you post the right article? I didn't see anything in there about Deere.

Yes it's the right article. It's in there but you have to read in between the lines to see it

 

[Cahaba Valley Farm]

The under 40 segment is almost 100% a discretionary purchase.

In the article I shared, the president at the time admitted that Kubota's core customer is estate owners.

 

[ovrszd]

Did you post the right article? I didn't see anything in there about Deere. Our yellow Deere dealer is doing well. We avoid the green JD dealership so don't have any idea about them. Kubota is doing well. Lots of tractors and lots of sales. Not a used machine on the lot.

I'm sorry to hear that you are expecting a recession where you live. Where we are it doesn't seem to be headed that way. It's a big country and varied. Here in the Western US financial things seems to be chuggng along just fine. Everyone is unhappy about prices, but it hasn't slowed purchases down. Gas costs too much, but that hasn't slowed driving either. Housing has fallen 10% this fall, but it was up 20% last year so we knew it would. The older folks I talk to are spending savings - but realize that to be part of a normal financial cycle.
The important thing is that people looking for work have their choice of jobs.

rScotty

Where are you located?

 

[Hay Dude]

I think you had to live through those periods to fully understand how they differed financially from today. Since you brought up the subject of borrowing, I'll stick with that. It's a good way to look at the differences.

In all of those times you mention, today's interest rates would have been seen as low. Interest rates were much higher then, and repayment periods were shorter. And nobody - not even the most radical - talked about "debt forgiveness". That was a concept that didn't even exist....probably it couldn't have existed.

Another thing, I'll add an edit here because it is important. During those times a co-signature guaranteeing payment was commonly required for young borrowers and even known good risk loans often required some sort ot collateral as a guarantee. Those requirements are rarely mentioned today.

But more importantly was how borrowing was used in 1980, 1990, and 2008. In spite of being recent, during all of those times you mention, people stlll tended to take on debt as a means to invest in something that would gain value. Taking on debt just to consume - to buy products which were either used up or lost value over time - was much less common. Today that trend has almost completely reversed.

rScotty

And that ties in with what scootr is saying. Although it doesn’t appear so, people are worse of financially today. Their wages have not grown proportionally with the cost of goods due to the extreme inflationary period we are in, but don’t worry about that too much, it’s “transitory”.

Interest rates, the cost paid to banks for borrowing, is much higher now, too. So there’s more money spent on interest on loans and credit cards.
Just because it’s easier or requires less collateral or signatures to acquire a loan, doesn’t make the borrowing any cheaper. It just opened the door for lending money more money easier to the consumer, which “baits” them into borrowing more money…at todays higher rates, of course.

Financially, things have changed mostly for the worse, but one thing is for certain, the bank almost always wins.

 

[rScotty]

Yes it's the right article. It's in there but you have to read in between the lines to see it

And that ties in with what scootr is saying. Although it doesn’t appear so, people are worse of financially today. Their wages have not grown proportionally with the cost of goods due to the extreme inflationary period we are in, but don’t worry about that too much, it’s “transitory”.

Interest rates, the cost paid to banks for borrowing, is much higher now, too. So there’s more money spent on interest on loans and credit cards.
Just because it’s easier or requires less collateral or signatures to acquire a loan, doesn’t make the borrowing any cheaper. It just opened the door for lending money more money easier to the consumer, which “baits” them into borrowing more money…at todays higher rates, of course.

Financially, things have changed mostly for the worse, but one thing is for certain, the bank almost always wins.

I'm not good at "reading between the lines" - or I might say I think I am good, but keep gettihg it wrong. What I am saying is I still don't get the point about Deere.

As far as high interest and these poor financial times, the answer to that one is simple.
When the interest rates are high, DON'T BORROW!! Find some other way to get things done.
Because if you borrow when interest rates are high, you'll miss out when they come down.

The economy always oscillates; that's not going to change.
Get in step. It's simple: do not borrow when the rates are high - and you will not be affected by high rates.
Yes, it means fixing old cars and clothes and appliances plus doing without some luxuries. But only this once.
Do it that way once and then you will be ahead of the game.

rScotty